In Vietnam in recent months, gasoline prices have always caused people a headache. The continuous increase in the price of gasoline causes a great impact on the financial problems of each person because currently, the number of vehicles using petrol in our country accounts for the majority. From here, many people ask the question “Why is gasoline so expensive?” Today, LSX Lawfirm will give you an article about “Why is the price of gasoline in Vietnam so high?“, as follows:
What is gasoline?
Gasoline, formerly known as ether, is a light liquid containing hydrocarbons, volatile, flammable, and distilled from petroleum.
And Gasoline is used as a fuel used to make fuel for internal combustion engines that use gasoline, fuels for consumption, daily activities such as cooking, some heaters, in some types of lights. fire As a solvent to dissolve some substances, used to remove some stains on metal, glass, and plastic fabrics.
Gasoline is processed from petroleum by direct distillation and Cracking, has a density d15= from 0.70 to 0.75, is volatile, flammable, has a characteristic odor, and the boiling point is from 35-200°C. Motor gasoline is used as a fuel for internal combustion engines, carburetor type (gasoline engines).
Gasoline price situation in the region and in the world
As of March 7, 2022, according to Gas Petrol Price, the average price of gasoline in the world is 1.29 USD/liter. Of the 170 countries and regions on the list, 45 have gasoline prices of $1, 74 have prices between $1.00 and $1.50, and 25 have prices between $1.50 and $2.00. and 26 have expensive prices above 2 USD.
Which, Venezuela and Libya have the cheapest price, only 0.03 USD/liter, followed by Iran (0.05 USD). Hong Kong (China) has the highest gasoline price of 2.83 USD, while Qatar is in the Top 10 richest economies but has gasoline prices as low as 1 USD.
Vietnam ranks at 74/170 in the ranking of petrol prices and GDP per capita in countries and regions around the world. Currently, each liter of RON 95 gasoline costs about 30,000 VND/liter, equivalent to about 1.30 USD, only slightly higher than the average gasoline price in the world.
Therefore, in general terms, gasoline prices in Vietnam are still quite “easy to breathe” compared to other countries in the world and the region.
Reasons for high gas prices
Epidemic
The pandemic depressed energy prices in 2020, even sending the US oil price index below zero for the first time, but prices have rebounded faster and more than many analysts expected. , in large part, because supply has not kept up with demand.
Western oil companies, partly under pressure from investors and environmentalists, are drilling less oil than they did before the pandemic to contain a surge in supply. Industry executives say they are trying not to make the same mistake in the past when they pumped too much oil at high prices, leading to a drop in prices.
In other countries such as Ecuador, Kazakhstan, and Libya; Natural disasters and political instability have limited output in recent months.
“The unplanned shutdown has turned what was supposed to be a pivot towards surplus into a production gap,” said Louise Dickson, oil market analyst at research and consulting firm Rystad Energy deep”.
In terms of demand, much of the world is learning to deal with the pandemic, people are eager to shop and take trips. Concerned about being exposed to the infectious virus, many people are choosing to drive instead of using public transport.
Political geography
Ben Cahill, a senior fellow at the Center for Strategic and International Studies in Washington; The Russian-Ukrainian tensions put the “oil market in jeopardy,” said the report.
Russia produces 10 million barrels of oil per day. The United States would not be significantly directly harmed if Russian exports were to be halted, as Russia only exports about 700,000 BPD to the United States. This relatively modest amount could easily be replaced by oil from Canada and other countries.
But any disruption to Russian shipments through Ukraine; or other pipeline sabotage in Northern Europe; would paralyze much of the continent and distort global energy supply chains. That’s because day traders; the rest of the world cannot replace Russian oil.
Even if Russian oil shipments were not disrupted, the US and its allies could impose sanctions; or export controls on Russian companies; restrict their access to equipment; this could gradually reduce Russian production.
In addition, disruptions in Russian natural gas exports to Europe could force some utility companies to produce more electricity by burning oil rather than gas. That will increase demand and prices around the world.
What can the US and its allies do if Russian production is disrupted?
The US, Japan, European countries, and even China could release cruder from their strategic oil reserves. Such moves can be helpful; especially if a crisis is short-lived. But reserves will not be enough if Russia’s oil supply is disrupted for months or years.
Western oil companies that once pledged not to produce too much oil are likely to change their approach if Russia is unable or unwilling to supply as much oil as it has done. They will have great financial incentives – from soaring oil prices – to drilling more oil. But those businesses will take months to ramp up production.
What is OPEC doing?
President Joe Biden has urged the Organization of the Petroleum Exporting Countries (OPEC) to pump more oil, but some members have failed to meet their monthly production quotas and some may not be able to rapidly increase output. . OPEC members and their allies, including Russia, have agreed to follow through on a plan to increase output in February by a relatively modest 400,000 BPD.
In addition, if Russia’s supply is suddenly reduced; The US will likely put pressure on Saudi Arabia to increase production independently. Analysts say the kingdom has several million barrels of spare barrels that could be tapped in the event of a crisis.
When will oil prices drop?
Oil prices go up and down in cycles, and there are a number of reasons why prices could fall over the next few months. The pandemic is far from over, China has closed several cities to prevent the spread of the virus; slowing the country’s economy and energy needs. Russia and the West can reach an agreement – formal; or implicitly – to prevent conflict in Ukraine.
And the US and its allies could revive the 2015 Iran nuclear deal that former President Donald Trump abandoned. Such an agreement would allow Iran to sell oil much more easily than it currently does. Analysts say Iran could export 1 million barrels; or more per day if the nuclear deal is reinstated.
Ultimately, high prices can reduce demand for oil enough to cause oil prices to fall. For example, one of the main financial incentives to buy an electric car is that electricity tends to be cheaper than gas per kilometer. Sales of electric cars are growing rapidly in Europe, China, and increasingly in the US.
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Above is LSX Lawfirm’s advice on the content of the problem “Why is the price of gasoline in Vietnam so high?“. And all the above knowledge to use in work and life. If you have any questions and need more advice and help, please contact the hotline for the reception. Lawyer X is a place that provides reputable and fast business services at reasonable prices. Customers will be extremely satisfied when using our services.
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Related questions
As a general rule, richer countries have higher gasoline prices; while poorer countries and producing and exporting countries have significantly lower prices. The price difference between countries is mainly due to taxes; and various petrol subsidies. All countries have access to the same petroleum prices in the international market, but then decide to impose different taxes.
Accordingly, to a large petroleum business in Ho Chi Minh City, the current supply of gasoline is not lacking, but the market still has a situation where some stores have stopped selling because the world price of gasoline continues to rise and discounts are low. So the more petrol stations sell, the more they will lose.
Accordingly, to Clause 1, Article 38 of Decree No. 83/2014/ND-CP (amended and supplemented in 2018, 2021); petrol and oil selling prices are implemented according to the market mechanism; regulated by the State, in accordance with the evolution of world petroleum prices and the socio-economic situation in each period. Clause 3, Article 38 of the Decree stipulates the time to administer petrol and oil prices on the 1st; 11, and 21 of every month. In case the price of petroleum products has abnormal fluctuations; The Ministry of Industry and Trade is responsible for reporting to the Prime Minister for consideration; decide the appropriate time to operate petrol prices.
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